The goal of the project is to define the biochemical mechanisms that cause embryonic cells to differentiate into particular cell types as a function of their position in the embryo. In the Drosophila embryo, the basic features of the dorsal-ventral body plan are controlled by the products of 12 maternally-expressed genes. Genetic and molecular studies have shown that these 12 genes encode components of a signaling pathway in which an extracellular ventral cue triggers a cascade of protein interactions that ultimately lead to the graded translocation of a transcription factor from the cytoplasm to the nuclei on the ventral side of the embryo. The experiments proposed here will define the nature of the extracellular events that generate the ventral signal, define how those events lead to the production of a ventral ligand for a transmembrane receptor, and determine the mechanism of receptor activation. Biochemical experiments will test the hypothesis that the product of the Toll gene is a transmembrane receptor that is activated by binding of the processed product of the spatzle gene. Combined biochemical and genetic experiments will define the regions of the Toll and spatzle proteins necessary for their interaction. Experiments will test whether ligand binding activates Toll by inducing multimerization of the protein. Experiments will test whether proteolytic processing of the spatzle protein is necessary for its activity as a ligand and whether the protease that activates spatzle is encoded by the easter gene. Current data indicate that the ventral activation of the zymogen form of the easter protease is a crucial early event that defines embryonic dorsal-ventral polarity. Experiments will test whether the easter zymogen is ventrally activated. The components that initiate dorsal-ventral asymmetry by activating the easter zymogen on the ventral side of the embryo will be identified. These studies will provide biochemical answers to fundamental questions in developmental biology about the origin of pattern and asymmetry in groups of cells. The questions addressed by this grant on the mechanism of receptor activation and localized ligand production are of general importance for understanding intercellular signaling in development, physiological homeostasis and disease.